....Of Mr. Cain's many ideas, the most well-known -- in part because of its clever sound-bite name -- is his 9-9-9 plan which aims to replace most current federal taxes (including income tax, death tax, payroll tax, capital gains taxes, and double-taxation of dividends) with a 9% flat tax for business income, a 9% flattax for individual income, and a 9% national salestax. The plan would eliminate almost all deductions.

While Mr. Cain's consistent results-oriented approach is admirable -- not least for its contrast with the other candidates -- voters should be wary of the 9-9-9 plan despite its initial appeal. In short, it is somewhere between folly and economic suicide to implement a national salestax, even at a modest rate, without simultaneously repealing the 16th Amendment to the Constitution (which permits a national income tax.)

There is in economics a relatively new concept known as Hauser's Law, named for its creator, economist Kurt Hauser of the Hoover Institution. Hauser's law posits that the federal government cannot take more than about 19.5% of national income through taxation and that soaking the rich (or those whom President Obama defines as rich) will not generate the tax revenue..........

 United Kingdom: 36.1% total taxes/GDP, with a VAT rate of 17.5 percent taking 6.8% of GDP. (The UK's VAT rate has since been raised to 20 percent.)

In other words, governments of these countries which have national sales taxes take far more of the national wealth than we do in the United States. There are several European countries with even more punishing VAT and income taxes, with Denmark's government confiscating an astonishing 48.8 percent of national income.

[In short, it is somewhere between folly and economic suicide to implement a national salestax, even at a modest rate, without simultaneously repealing the 16th Amendment to the Constitution (which permits a national income tax.) ]

I don’t like articles that compare our tax rates and Europe’s tax rates. European tax rates cover their healthcare, and lots of other social amenities...not saying it’s right to have the gov’t give those perks...just saying comparing our tax rates and European tax rates is like comparing apples and oranges.

The only real way to get tax reform is to eliminate all “Hidden” taxes and outlaw withholding from paychecks. If the citizen had to save up money to pay taxes quarterly, no politician would ever dare raise taxes ever again.

Oh, brother. This idiot assumes that a VAT tax and a national sales tax are the same thing. They're not even close. A VAT tax is a Value Added Tax, which means that the value added at each stage of the production process is taxed based on the incremental value produced. As Friedman pointed out decades ago, this is one of the most inefficient taxes you can have. He goes on to say that something as simple as a loaf of bread has 67 steps to produce. As a result, the bureaucracy created to administer the tax would be huge, much larger than the current IRS.

I think the 999 Plan is a good one, provided the current IRS Code goes out the window when it's implemented. Indeed, US taxpayers should insist on this as a precondition to its acceptance. Otherwise, you'll have both.

9
posted on 09/30/2011 8:50:46 AM PDT
by econjack
(Some people are dumber than soup.)

Once again an author with a welded shut mind deliberately misleads to avoid rationally discussing Cain's plan As the author knows, comparing it to a VAT which taxes at every level of production and the 9-9-9 plan which only taxes it at point of sale is completely dishonest.

In addition the argument that you "must repeal the 16th Amendment 1st" is nonsense.

What is to prevent Congress from raising tax rates 20-30-50% right now?

The same political pressures that keep that from happening right now, apply even more so to the 9-9-9 plan

Since everyone pays the 9-9-9 tax it is impossible to demagogue raising it as "making the rich pay their fair share". Everyone know raising it means they will pay more

So rather then cling to their preconceived dogmas out of an emotional attachment to a certain candidate, the critics of 9-9-9 might want to try actually ADDRESSING THE FACTS for a change instead of engaging in this baseless demagoguery and fear mongering.

10
posted on 09/30/2011 8:53:50 AM PDT
by MNJohnnie
(Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)

The purpose of the 9-9-9 Plan is to provide a transition to the Repeal of the 16th Amendment and transition to the Fair Tax. It does this by making Federal taxes more visible and simple. Employees will get used to having more in their paychecks. The paperwork and time spent calculating what to do based on the tax code goes away. It is a real “Change” that everyone will notice. It can't be implemented unless small-government citizens are able to shape the legislative and executive branches in 2012. The ruling class will not do this. I liked “Fed Up!”, but Rick Perry is still to close to a ruling class member for my tastes. Herman Cain is the only one in the race now that fits the bill. If he had Sara Palin for a VP we would really be able to do some “changing and abolishing!” Also, I could recycle my McCain-Palin bumper stickers with a pair of scissors! ;-)

11
posted on 09/30/2011 8:55:02 AM PDT
by SubMareener
(Save us from Quarterly Freepathons! Become a MONTHLY DONOR!)

So far as I’m concerned, the VAT tax is the crack cocaine of the statist bureaucracy, insidious in that it is so hidden, and economically deadly in that it can be raised to such high rates. One of my major fears with the Obama cabal is that they would be able to introduce a VAT, which I’m sure they’d do if they were able to.

Nonetheless, I might be willing to support a 9-9-9 since it is a nice balance of taxation of income and consumption, and since it affects everyone equally (how does one keep income taxes at reasonable rates if 47% of the population pays no income tax?).

However, in order to get my support for 9-9-9, Cain (or anyone else) would have to come up with an ironclad process that would make increases in the VAT portion extremely difficult, if not impossible. I don’t know if you can bind a future Congress by requiring a 75% super majority to increase the VAT part, but if something like that could be done, I’d probably go along with it.

As long as you make virtually limitless steams of revenue available to the Feds, they will spend it. UNTIL you remove the possibility of tax hikes at will, they will spend it. Reforming the tax code to starve the beast is the 1st step to reigning it in.

For 70 years we have tried it your way, the spending is never cut. How about we try something different this time?

14
posted on 09/30/2011 8:56:26 AM PDT
by MNJohnnie
(Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)

He has never held office, so of course, he is not responsible for any legislation or government activity. Cain has simply not been tested and we have no idea how he will actually govern, all we have is speculation based on his business record and his speeches.

15
posted on 09/30/2011 8:57:02 AM PDT
by HerrBlucher
("It is terrible to contemplate how few politicians are hanged." G.K. Chesterton)

Hauser’s Law better stated is that no formula for taxes will generate a sustained netting of more than 19.5 percent of GNP. Super-confisacatory taxes will shrink the GNP and a one-year windfall should be compared as a percent to the previous larger GNP.

Big Bro can only tax so much before the big money scrambles for cover. The gov gains nothing from that gold buried in the backyard and the gov gains nothing from unreported sales and transactions of a growing off-paper economy.

19
posted on 09/30/2011 8:57:58 AM PDT
by Monterrosa-24
(...even more American that a French bikini and a Russian AK-47.)

Isn’t that the truth...he has less experience than Mittens...why put someone in as President as was done with the disaster in chief living in our WH and trust he’d know what to do. Perry has 11 years of governoring a state larger than most countries and is now the 13th largest economy in the world. Perry has a proven record on the economy and jobs. People have become brainless since they are either not being honest or are that brainless.

26
posted on 09/30/2011 9:07:11 AM PDT
by shield
(Rev 2:9 Woe unto those who say they are Judahites and are not, but are of the syna GOG ue of Satan.)

The only way I will support ANY national consumption tax like the FairTax, is if the Sixteenth Amendment is repealed FIRST. Not “oh, we’ll repeal it later.” Not “we promise to keep the income tax down to 9%.” The ability for the Federal government to levy an income tax AT ALL *MUST* be removed from them FIRST before a consumption tax can be implemented. Otherwise we will end up, in very short order, with crushing income taxes AND a European-style double-digit VAT (because they will quickly turn a simple sales tax into a VAT).

We had a friend who worked for the government in Germany. He once described to me what their “taxes” covered and I was amazed. As I said, not that I agreed, but then I understood the higher tax rate.

On the other hand, we lived in the Cayman Islands for awhile, paid no income tax (paid US income tax on income over a certain level, but there’s a pretty large deduction if you’re out of the country), and yet paid hugh duties on everything we bought. We had healthcare on the island at a greatly reduced rate (compared to US) and we were expats...all children’s healthcare was free. It was paid for with taxes, just not income taxes.

The point of my post was, you just can’t compare what one nation pays in taxes, versus what another pays, because what those taxes pay for varies so greatly from country to country.

Not much deviation though, depends on how you squint at the numbers. Upshot is we can’t squeeze much more tax revenue out of the economy no matter what: as the number approaches 19.5%, economic activity slows/adjusts to prevent getting there.

Elsewhere someone reported a 1% increase in tax revenue translates to a ~3% decrease in GDP.

VAT taxes at every level value is added. A Sales tax only taxes once at the final point of sale.

Yes, it would be better to eliminate the business taxes completely. Unfortunately that is not going to be politically feasible right now. You need a bridge from one system to the other.

9-9-9 eliminates things like the double taxation on capital gains and income as well as massively reducing Congress's power to play political games with the tax code. It also eliminates business's corrupting the political system by lobbying for favorable treatment

NO 9-9-9 is not perfect. It is only completely better then the existing system

34
posted on 09/30/2011 9:33:17 AM PDT
by MNJohnnie
(Giving more money to DC to fix the Debt is like giving free drugs to addicts think it will cure them)

Cain has simply not been tested and we have no idea how he will actually govern, all we have is speculation based on his business record and his speeches.

When considering a candidate, political experience (ability to compromise, exchange political favors, speak out of both sides of your mouth, and placate lobbyists) is not high on my list. Nor do I consider the ability to name the Prime Minister of Kyrgyzstan key to governing. All presidents have encountered situations that did not come up in party platforms or were asked about in debates. I want to know if they will be able to handle that situation in a manner I would consider successful. To me, the factors I look at are whether the person has executive experience and a track record of success in leadership positions; and, the core set of values. I like Governors because they have executive experience but would not rule out a person with business executive experience. In fact, given the current economic conditions which, I believe, are a direct result of excessive government (both spending and meddling in the free market) I would rather have a person who knows business and has created private sector jobs than a career politician who has risen through the political ranks to a Governor's position.

I thought Obama had minimal experience, which was legislative, so no real leadership skills. I thought his personal ideology was to hate common American people and trust the government and the elite who believed like him. When decisions needed to be made that had not been identified during the campaign, I believed he would make the wrong call every time. The only decision he has made that surprised me was the call to take Osama out. I think that one actually went against his instincts but was made for his own political favor. Otherwise, he has acted just as expected.

I believe Cain's core values are pro-America, pro-capitalism and socially conservative. When he gets the 3 AM I would trust him to make the right decision and have the ability to implement it.

Not the same. With a VAT tax, only the incremental value is taxed. Also, in every state I'm familiar with, you can acquire a Sales Tax Exemption certificate that allows you to avoid paying sales taxes on items you plan to resell. Usually, this only requires a state or federal business ID number. That VAT tax has no provisions for exemptions. They are NOT the same beast.

This line alone tells you everything you need to understand about this writer.

He believes that your money belongs to the Washington instead of the people as Herman Cain believes. To this the current communist Progressive tax is better since it allows Washington to ONLY give you back 25 cents for SOME of your tax dollars. After all that money belongs to Washington and not to the person who earned their money.

The 9,9,9 plan is very easy and would eliminate many lobbyist. This is why the writer is against this plan.

From my 2010 return accounting for all my deductions, My tax owed came to just a little under 9 percent. So with Cain's plan IF that means no more deductions, or tax credits I would be paying a few hundred dollars more than I do now. But if things stay the same as they are now the deductions I take now will become less and less with each year, as I pay down my home, and a big hit when my child graduates and moves out. And that will be when I can lease afford the tax hit, when I'm approaching retirement.

So with Cain's plan or any of the similar flat taxes proposed by others, my taxes remain constant, and there will be no darker days on the horizon to look forward too.

Any business that has more than about 5% of the gross revenue going to overhead, things that just mind the farm, is headed for broke in my view. You can’t run a business with 20% of the revenue going to stuff that does not produce things. In the case of a government you could argue that the military, highways and such produce things but welfare DOES NOT produce anything but more welfare and more babies and more dependents that don’t produce.

Hauser’s Law, named for its creator, economist Kurt Hauser of the Hoover Institution. Hauser’s law posits that the federal government cannot take more than about 19.5% of national income through taxation and that soaking the rich (or those whom President Obama defines as rich) will not generate the tax revenue

39
posted on 09/30/2011 10:02:20 AM PDT
by Sequoyah101
(Half the people are below average.)

You’re right, a national sales tax is not the same as a VAT. I’d still worry about abuse of a national sales tax (and most especially if the donkeys tried to use it as a gateway to a VAT), but still a national sales tax is a whole lot more palatable than a VAT.

Another so-called expert but no where have I seen someone attempt to mention how much money grey market earners (drug dealers, under-the-table employee’s, etc) spend. Therefore we don’t exactly know what they would contribute by paying the 9% national sales tax. However, I do know they would be paying more federal taxes than they pay today.

Also, even with the empowerment zones, the 9-9-9 plan is a fairer system because most of the 47% who pay no taxes would start to contribute instead of being sponges on the rest of us.

Like the original XVI Amendment, it began as one thing and morphed into something else. Mainly the 16th began as a tax on corporations that were and still are afford certain protections under Federal and State laws (including persons deriving their livelihood from taxpayer monies). Private businesses were not originally affected by the 16th including private wage earners, that was redefined/came/morphed later.

People need to understand their unalienable rights and one is the pursuit of happiness where working or having a job is not a gain in society but just a right, and has nothing to do with income

VAT is a socialistic plan to confiscate funds for redistribution, the bureaucracy needed for accounting alone means it doomed from the start.

A national tax in lieu of the 16th makes some sense if only because it is spread among everyone during consumption. The income portion of the 999 plan is crap and based on current overall taxation in part.

I think the 999 Plan is a good one, provided the current IRS Code goes out the window when it's implemented. Indeed, US taxpayers should insist on this as a precondition to its acceptance. Otherwise, you'll have both.

Amen. Even the slightest vestige left of a law taxing income will be the camel's nose in the tent. The biggest plus I see is that if the corporations pay a flat tax, all those tax-deductible perks go out the window, Mind you, they can still offer those perks to their execs, it's just that the tax-payer no longer foots the bill. The smart corporations will redirect that money into trying a get a larger market share or into R&D - a win-win for them and this country.

That means mass unemployment for the spendy resorts and restaurants, for instance, and a blessed massacre of the K Street lobbyists. Also relief from the "contribute to my campaign and I'll pass a bill favorable to you" blackmail by the pols.

Throw in replacing tax-payer-funded retirements with 401`Ks and you've broken the back of the professional politicians.

48
posted on 09/30/2011 12:27:08 PM PDT
by Oatka
("A society of sheep must in time beget a government of wolves." Bertrand de Jouvenel)

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